The New War in Mobile Is All About Messaging Apps Like Snapchat

There’s a new battle brewing in the social media world. Direct messaging, long a minor feature of most social networks, is gaining more prominence as mobile users increasingly favor apps for communicating instead of traditional SMS texting.

Instagram is the latest to step into the fray. Thursday the company announced Instagram Direct, a private messaging feature that allows users to share photos privately with up to 15 people instead of their entire group of followers. Recipients of the private photo can then comment below it in a group thread.

The new tool will help Instagram reposition itself as a communication platform and not just a place to log pretty pictures. Like the other big social networks, it’s now competing for people’s attention with a slew of popular messaging apps that have grown quickly in 2013. Users of Snapchat, which famously boasts photos that disappears in ten seconds or less, now receive 400 million photos and videos each day. WhatsApp, a popular texting client now has 350 million monthly users, more than double Instagram’s 150 million. Another chat app, Kik, announced Thursday that it has 100 million registered users, an increase of 70 million from a year ago.

These chat apps have already undermined cell phone carriers’ traditional SMS text messaging, which declined for the first time ever in 2012. Now the big social networks see them as a threat too. A generation of teenagers who have grown up in the era of Facebook don’t necessarily want to broadcast all their photos and messages to everyone they know. The world’s largest social network has acknowledged that usage among its youngest members is declining. Newer apps easily allow users to tailor who sees what, and for how long.

Rick Summer, a senior equity analyst at Morningstar, says Instagram Direct is a defensive maneuver to prevent users from defecting to those new apps. “They’re worried about people communicating and really creating a network outside of the social network they’re already participating in,” he says.

Instagram isn’t the only one sweating. This week Twitter dusted off its rarely promoted direct messaging feature and added the ability to send private photos via its mobile apps. Facebook has had a dedicated Messenger app for years and recently released updated versions for iOS and Android.

So far, these direct messaging tools haven’t generated revenue directly for the social giants, and Instagram CEO Kevin Systrom said the company isn’t looking to monetize Instagram direct anytime soon. The real value of the messaging component is controlling more of users’ time. A minute spent chatting privately on Instagram or Facebook is a minute not spent growing an affinity for a newer messaging app. “Facebook wants to keep you within Facebook’s walls and connected to Facebook as often as possible,” Summer says. “This is really about holding onto their user base.”

Messaging features also get people sharing more about their likes and dislikes on a network, valuable data for companies trying to sell effective targeted ads. Google’s Gmail has been serving up targeted ads with data gleaned from one-on-one communications for years.

While Facebook and Twitter haven’t made money with their messaging services, some of the startups in the space are generating a lot of cash. Line, a messaging app popular in Japan, pulled in $100 million in revenue in its most recent quarter. WhatsApp, which serves no ads but charges users an annual subscription fee of $0.99, could generate as much as $350 million annually with its current user base. There’s been rampant speculation about how Snapchat might one day make money ever since the company reportedly turned down a $3 billion buyout offer from Facebook.

Expect more direct messaging features from social media sites in the future and more ways to broadcast content to a wide audience from chat apps. Snapchat, for instance, recently introduced a new feature to publish ongoing photo stories for 24 hours instead of ten seconds. Eventually, it’s going to be hard to tell all these social networks and messaging apps apart.

“The great thing for users is that they’re getting more functionality,” says Brian Blau,research director in consumer technologies at Gartner. “The bad thing for the market in general is that all these services are becoming homogenous.”